S&P earnings yield: 6.4% 10 yr bond yield: 5.2% If the 10yr (and everything else) stays the same, SPX will have to rise 23% to reach parity. The best way to play this, in my opinion, is to hold the spread: short ZN, long ES, or the cash equivalent of those. Effectively, it is a bet on the spread to narrow.
Right, we're using the same numbers, simply different conclusions. I wish you luck with the trade -- perhaps we should schedule a prearranged trade?
Instead of good old disagreeing, it appears to be more fashionable now to call each other "fvcking moron", "idiot", "baby", "dipsh1t" in every reply. Some reading for the 2% who are interested in the actual topic: "How Much Do Interest Rates Affect the Fair Value of Stocks?" http://www.hussman.net/wmc/wmc070521.htm Yale Database: Historical PE/Inflation/Interest Rates http://www.econ.yale.edu/~shiller/data.htm (Download the Excel, play around one can see that in the past - in many instances - we had to see the spread to become NEGATIVE before the market finally tanked for good, i.e. PE yield 1-2% below bond yield.)
Read before you speak http://kim.biyn.com/Linux/how_to_prevent_hotlinking_images_on_apache_server_using_mod_rewrite This part: